RALEIGH, N.C. (WGHP) – Pitching what he called “not a good budget but a great budget,” North Carolina Rep. Donny Lambeth stood before the House on Wednesday and led a roughly 3.5-hour presentation of the biennial budget that lawmakers want to send to the state Senate.

They took the first step by considering 23 amendments – adopting 10 – before voting to pass House Bill 259, 78-37, on second reading. There is one more reading required – and probably more amendments – before Speaker Tim Moore (R-Cleveland) fulfills his promise to send the budget plan to the Senate before Easter. He said the final vote would be no later than 10:30 on Thursday morning.

Rep. Donny Lambeth (R-Forsyth), senior chair of the Appropriations Committee, pitches the budget to the House. (WGHP)

This plan calls for about $29.787 billion in 2023-24 and $30.903 billion in ’24-’25. It includes a reduction in tax revenue in both years, with the state individual tax rate decreasing to 4.5% in 2023, which is earlier than lawmakers had thought could happen.

Lambeth, the senior chair of the Appropriations Committee and, thus, the maestro of this plan, cited the 29,000 new jobs and $19.3 billion of capital investment are coming to the state and said this budget “builds on our successes.”

“We are a tapestry of extraordinary people woven together by a desire to do their best, be their best,” Lambeth said. “We all like calling North Carolina home. …. This is not a spend, spend reckless plan. It’s an opportunity to build on our successes.

“There are things in this budget that I don’t like. You’d be surprised. But this budget oozes with help, help, help. You are going to vote against so many things in this budget that are so positive … historic funding levels for so many programs.

“If you don’t like this, you might not like the Senate version that comes back to us, either.”

That said, the Senate later on Wednesday announced a plan to lower the personal income tax rate by 2% over the next five years, ultimately setting the rate at 2.49% starting in 2027. That would be lower than the 2.5% Arizona has in place for 2023, the nation’s lowest.

As usual, the budgeting process is an ebb and flow of ideas, investments and numbers. This one has many moving parts and policy written into those numbers.

One of the key aspects of the House’s proposed budgets is that it takes in $1.6 billion in subsidies from the recently adopted expansion of Medicaid – legislative leaders had insisted that the rollout was “budgetary” – over the next eight quarters and redistributes that money.

Lambeth had said there was $1 billion for mental health reform, $117 million for new safety grants, classroom safety, antibullying and local law enforcement grants. Overall, he said $1.1 billion of that would be spent on “target high-need areas: workforce development, mental health, school safety.”

Highlights of the House’s plan

The 2-year plan as presented includes:

  • Teachers would receive 10.2% raises (5.5% in the first year), but they also would receive 8 weeks of parental leave (up from 4), stipends for having a master’s degrees and some assurances about class size for fourth and fifth grades.
  • State employees would receive 7.5% raises (4.25% in the first year), and there would be an additional 2% for positions that are harder to fill, such as school bus drivers. North Carolina Highway Patrol employees would get 11% over 2 years.
  • There are 2% cost-of-living increases for retirees (1% each year), a subject that committee members reinforced at length.
  • UNC system employees would get 7.5% raises over two years.
  • There is $40 million in school safety.
  • There’s $1 billion in infrastructure to help with repairs to the water and sewage systems.
  • The budget also allows for the State Bureau of Investigation to become an independent department, not under the Department of Public Safety, and gives legislators the right to remove its director for cause. The governor appoints the director to a 6-year term and currently is the only person who can remove that director.
  • There is a significant expansion of opportunity scholarships for school choice, which is tied to Senate Bill 406.

The amendments

Those 10 approved amendments mostly clarified technical issues by changing numbers in the master document, language, names and even timing and accountability. There was one to specify that new prescription medications approved by the FDA would be covered by state medical insurance and specifies those listed for “mental disorders.”

Another addressed the Saluda rail corridor conservation council and to use ARPA funds for an educational opportunities pilot program at NC State. There was one to amend the list of approved schools for state-assisted programs to include private schools.

Montessori teaching licenses and their allowances were addressed, and there is a $7.5 million pilot program to purchase private health insurance for firefighters. Another inserted prior water and wastewater funds in the expansion of Lake Tillery.

Senate tax rate

NC Senate Leader Phil Berger (R-Rockingham)

Even before the House took its first vote, though, Senate Leader Phil Berger (R-Rockingham) had introduced a bill to lower the personal income tax over the next five years.

Senate Bill 651 – “Tax Relief For All” plots the course of that decline through typically half-point drops in the rate starting with the House’s plan of 4.5% for this year.

“Republicans in the Senate have a different idea than Democrats when it comes to tax policy,” Sen. Berger said. “They would like to raise your taxes to fund a costly, big-government agenda. Senate Republicans would rather cut your taxes so you can keep more of your hard-earned money.”

The decline would be 4.5% this year and 3.99% next year. In the next budget, the rates would be set at 3.49% for 2025 and 2.99% for 2026. Thereafter the rate would be 2.49%.

Cooper’s reaction

North Carolina Governor Roy Cooper (Photo by Allison Joyce/Getty Images)

Gov. Roy Cooper, who had submitted a spending plan that called for $32.95 billion in 2023-24 and $34.24 billion in ’24-’25, already has said he doesn’t like the House’s plan.

“The House budget fails public schools while injecting culture wars into classrooms, increasing vouchers for unaccountable private schools, giving even more tax breaks to wealthy people and letting childcare centers fail when they’re needed to help parents get back to work,” Cooper said on Monday.

Cooper asked for $4.5 billion to “fully fund” public education, as the on-and-off Leandro court decision requires the legislature to do. And he asked for 18% raises for teachers; 8% cost-of-living increases for all state employees plus retention bonuses to address hiring gaps; about $1.2 billion for workforce development; $100 million for public safety; and $1.4 billion to address the mental health crisis.

‘We can do better’

Rep. Dean Arp (R-Union), one of the co-chairs with Lambeth, wrapped up the presentation by putting the budget in perspective.

“This budget addresses many of the issues you see today and positions the state for tomorrow,” he said. “It makes today and tomorrow better for North Carolinians. … It’s about what North Carolinians care about … schools, safety and economic security.

“We can’t solve Washington’s problems from Raleigh.”

State Rep. Robert Reives II (D-Chatham), the House minority leader, addresses the budget. (WGHP)

Democrats who spoke against the bill decried the mixture of policy based on funding rather than keeping them separate.

Rep. Robert T. Reives II (D-Chatham), the minority leader, said sometimes it’s like “we are parents giving out to children. I’d like to see us recognize where we are as a state. We have a lot of opportunity and remake who we are and who we are going to be going into the future. He implored legislators to “make real investments.”

Said Rep. Abe Jones (D-Wake): “It’s a blessed time we are living in. But needs aren’t being met. Children who look like me, their needs aren’t being met. Could be met if we provide resources. Law enforcement needs more support. We can do better.

“Good … better … best … don’t let my good rest until my better is best.”